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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-KSB/A
 
  
 State of Nevada
    
    75-1310613(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No)Incorporation or Organization)
 
  (214) 468 0000
   o
  þ o
 o
 o þ




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PART I
    
    
    3Item 1. Description of Business
    
    
    3(a) Business Development
    
    
    3(b) Business of Issuer
    
    
    4Item 2. Description of Property
    
    
    6Item 3. Legal Proceedings
    
    
    6Item 4. Submission of Matters to a Vote of Security Holders
    
    
    6PART II.
    
    
    6Item 5. Market for Common Equity and Related Stockholder Matters
    
    
    6(a) Market Information
    
    
    6(b) Holders
    
    
    7(c) Dividends
    
    
    7(d) Securities Authorized for Issuance Under Equity Compensation Plan
    
    
    7Item 6. Plan of Operations
    
    
    8Item 7. Financial Statements
    
    
    10Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    10Item 8A Controls and Procedures
    
    
    10PART III
    
    
    11Item 9. Directors, Executive Officers, Promoters and Control Persons
    
    
    11Item 10. Executive Compensation
    
    
    12Item 11. Security Ownership of Certain Beneficial Owners and Management
    
    
    12Item 12. Certain Relationships and Related Transactions
    
    
    13Item 13. Exhibits and Reports on Form 8-K
    
    
    14Item 14. Principal Accountant Fees and Services
    
    
    14INDEX TO EXHIBITS
    
    
    16302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer




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Date FirstName
    
    Age
    
    Elected
    
    Term
    
    PositionWilliam R. Miertschin
    
    57
    
    1997
    
    1 year
    
    President, CEO& DirectorRichard M. Hewitt
    
    67
    
    2002
    
    1 year
    
    Secretary, CFO& Director
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Name
    
    Position
    
    Annual CompensationWilliam Miertschin
    
    President & CEO
    
    $
    30,000Richard M. Hewitt
    
    CFO & Secretary
    
    
    6,000
  
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Name and Address
    
    Number of
    
    
    PercentTitle of Class
    
    of Beneficial Owner
    
    Shares Owned
    
    
    of ClassCommon Stock
    
    Connect Holding Corp.
    
    
    330,000
    *
    
    
    2.031$0.0167 Par Value
    
    1133 Empire DriveDallas, Texas 75247Common Stock
    
    Sammy Dog, Ltd.
    
    
    330,000
    **
    
    
    2.031$0.0167 Par Value
    
    400 North Bailey Ave.Fort Worth, Texas 76107Common Stock
    
    Ivan Webb
    
    
    1,481,085
    
    
    
    9.095$0.0167 Par Value
    
    901 West 6th StreetCisco, Texas 76437Common Stock
    
    John Davis
    
    
    1,828,181
    
    
    
    11.226$0.0167 Par Value
    
    Hillandale, Seaway LaneTorquay, DevonUnited Kingdom TQ2 6PN
 
 *Connect Holding Corp. has 250,000 shares of preferred stock, which has voting rights equal to
12,500,000 shares of common stock.**Sammy Dog, Ltd. has 250,000 shares of preferred stock, which has voting rights equal to
12,500,000 shares of common stock. Executive Officers and DirectorsCommon Stock
    
    William R. Miertschin
    
    
    314,163
    *
    
    
    1.929$0.0167 Par Value
    
    7738 Forest Lane #102Dallas, Texas 75230Common Stock
    
    Richard M. Hewitt
    
    
    397,242
    **
    
    
    2.439$0.0167 Par Value
    
    202 Fresh Meadow DriveTrophy Club, Texas 76262All Directors and Officers as a group (2 persons)
    
    
    711,405
    
    
    
    4.368
 
 *
    
    William R. Miertchin has 80,000 shares of preferred stock, which has voting
rights equal to 4,000,000 shares of common stock.**
    
    Richard M. Hewitt has 20,000 shares of preferred stock, which has voting
rights equal to 1,000,000 shares of common stock.   
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LOCAL TELECOM SYSTEMS, INC.Date: February 16, 2005
    /s/ William R. MiertschinBy: William R. Miertschin,President & Chief Executive
OfficerDate: February 16, 2005
    /s/ Richard M. HewittBy: Richard M. Hewitt,Secretary, CFO & Director  Signature
    
    Title
    
    Date/s/ William R. Miertschin
    
    President, CEO & Director
    
    February 16, 2005William R. Miertschin/s/ Richard M. Hewitt
    
    Secretary, CFO & Director
    
    February 16, 2005Richard M. Hewitt
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Report of Independent Registered Public Accounting Firm
 
      
 16




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A S S E T S


Current Assets  Cash
    
    $
    2,691Total Current Assets
    
    
    2,691Total Assets
    
    $
    2,691L I A B I L I T I E SCurrent LiabilitiesAccounts Payable and accrued expenses
    
    
    125,413Total Liabilities
    
    
    125,413Commitments and Contingencies
    
    
    0S T O C K H O L D E R S   E Q U I T YPreferred
Stock, par value $.10 per share
authorized shares 1,000,000 shares, 600,000 shares outstanding
    
    
    60,000Common Stock
    
    
    271,950Additional Paid-in-Capital
    
    
    9,456,612Accumulated Deficit
    
    
    (9,911,284
    )Total Stockholders Equity (Deficit)
    
    
    (122,722
    )Total Liabilities and Stockholders Equity
    
    $
    2,691




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For the Twelve Months EndedSeptember 30
    
    
    September 30REVENUES:
    
    2004
    
    
    2003Revenues
    
    $
    97,674
    
    
    $
    237,788Total Revenues
    
    
    97,674
    
    
    
    237,788COST OF REVENUESTelephone Services
    
    $
    75,102
    
    
    $
    179,923GROSS PROFIT
    
    $
    22,572
    
    
    $
    57,865EXPENSES:Legal and Professional Services
    
    
    17,271
    
    
    
    90,948Advertising
    
    
    
    
    
    
    14,250Impairment Loss
    
    
    319,308
    
    
    
    484,526Depreciation
    
    
    4,026
    
    
    
    8,051Consulting
    
    
    19,420
    
    
    
    154,000Salaries, Wages, and Transfer Agent Fees
    
    
    96,422
    
    
    
    117,676Other Selling, general & administrative expenses
    
    
    35,498
    
    
    
    107,112Total Expenses
    
    
    491,945
    
    
    
    976,563Operating Income
    
    
    (491,945
    )
    
    
    (918,698
    )OTHER INCOME (EXPENSES)Interest Income
    
    
    
    
    
    
    0Effect of Subsidiarys Stock Dividend
    
    
    
    
    
    
    Other Income (expenses)
    
    
    
    
    
    
    773Loss from Continuing Operations
    
    $
    (491,945
    )
    
    $
    (917,925
    )DISCONINUED OPERATIONS:Discontinued Operations
    
    $
    (61,076
    )
    
    $
    Net Loss
    
    $
    (553,021
    )
    
    $
    (917,925
    )Basic and Diluted Earnings Per Common Share
    
    
    (0.03
    )
    
    
    (0.07
    )Weighted Average number of Common Shares
used in per share calculations
    
    
    15,556,712
    
    
    
    12,520,582




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Additional
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Preferred Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    EquityBalance September 30, 2002
    
    
    39,330,585
    
    
    
    656,820
    
    
    
    
    
    
    
    
    
    
    
    8,780,662
    
    
    
    (8,440,338
    )
    
    
    997,144Conversion of Common toPreferred Stock
    
    
    (30,000,000
    )
    
    
    (501,000
    )
    
    
    600,000
    
    
    
    60,000
    
    
    
    441,000
    
    
    
    
    
    
    
    Stock Issued for Consulting
    
    
    1,540,000
    
    
    
    25,718
    
    
    
    
    
    
    
    
    
    
    
    128,282
    
    
    
    
    
    
    
    154,000Stock Issued for Legal Services
    
    
    64,657
    
    
    
    1,080
    
    
    
    
    
    
    
    
    
    
    
    63,577
    
    
    
    
    
    
    
    64,657Stock Sold for Cash
    
    
    2,436,000
    
    
    
    40,681
    
    
    
    
    
    
    
    
    
    
    
    20,562
    
    
    
    
    
    
    
    61,243Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (917,925
    )
    
    
    (917,925
    )Balance September 30, 2003
    
    
    13,371,242
    
    
    
    223,299
    
    
    
    600,000
    
    
    
    60,000
    
    
    
    9,434,083
    
    
    
    (9,358,263
    )
    
    
    359,119Stock Issued for Consulting
    
    
    25,000
    
    
    
    419
    
    
    
    
    
    
    
    
    
    
    
    2,082
    
    
    
    
    
    
    
    2,501Stock Sold for Cash
    
    
    2,888,181
    
    
    
    48,233
    
    
    
    
    
    
    
    
    
    
    
    20,447
    
    
    
    
    
    
    
    68,680Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (553,021
    )
    
    
    (553,021
    )Balance September 30, 2004
    
    
    16,284,423
    
    
    
    271,950
    
    
    
    600,000
    
    
    
    60,000
    
    
    
    9,456,612
    
    
    
    (9,911,284
    )
    
    
    (122,722
    )




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Twelve Months EndedSeptember 30
    
    
    September2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net Income (Loss)
    
    $
    (553,021
    )
    
    $
    (917,925
    )Adjustments to reconcile net income (loss) tonet cash
provided (used) to operating activities:Depreciation
    
    
    4,026
    
    
    
    8,051Stock Issued to Consultants
    
    
    2,502
    
    
    
    154,000Stock Issued for Legal Services
    
    
    
    
    
    
    64,657Discontinued Operations
    
    
    83,648Impairment Loss
    
    
    319,308
    
    
    
    484,526Effect of Subsidiarys Stock Dividend
    
    
    
    
    
    
    Accounts Receivable
    
    
    
    
    
    
    14,281Accounts Payable and accrued expenses
    
    
    (4,576
    )
    
    
    98,831Total Adjustments
    
    
    404,908
    
    
    
    824,346Net Cash provided (used) in Operating Activities
    
    $
    (148,113
    )
    
    $
    (93,579
    )Cash Flows from Investing Activities:Notes Receivable:Advances
    
    
    
    
    
    
    Collections
    
    
    
    
    
    
    0Acquisition
    
    
    
    
    
    
    Net Cash provided (used) in Investing Activities
    
    $
    
    
    
    $
    Cash Flows from Financing Activities:Common Stock
    
    
    89,553
    
    
    
    89,553Note Payable
    
    
    32,500
    
    
    
    32,500Net Cash provided (used) by Financing Activities
    
    $
    122,053
    
    
    $
    122,053Net Increase (Decrease) in Cash
    
    $
    (26,060
    )
    
    $
    28,474Cash Balance, Beginning of Period
    
    
    28,751
    
    
    
    277Cash Balance, End of Period
    
    $
    2,691
    
    
    $
    28,751Supplemental cashflow information:Cash Paid for interest
    
    $
    
    
    
    $
    Cash Paid for income taxes
    
    $
    
    
    
    $
    




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Description of Business
  Basis of Presentation
  Principles of Consolidation
  Use of Estimates and Assumptions
  Net Loss Per Common Share




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Statement of Cash Flows
  Income Taxes
  Property and Equipment
  Impairment of Long-Lived Assets
  Recent Accounting Pronouncements




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Current Assets
    
    $
    20,582Fixed Assets
    
    
    35,000Goodwill
    
    
    721,116Licenses
    
    
    525,000Debt Assumed
    
    
    (415,803
    )Net Assets Acquired
    
    $
    885,895
  Concentration of Credit Risk




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Fair Value of Financial Instruments




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EXHIBIT NO.
    
    PAGE NO.
    
    DESCRIPTION31(i)
    
    
    17
    
    
    302 Certification of Chief Executive Officer31(ii)
    
    
    18
    
    
    302 Certification of Chief Financial Officer32(i)
    
    
    19
    
    
    906 Certification of Chief Executive Officer32(ii)
    
    
    20
    
    
    906 Certification of Chief Financial Officer